September Annual Inflation Down to 2.28%

The U.S. Bureau of Labor Statistics (BLS) released their monthly Consumer Price Index report on October 11th 2018, for the 12 month period through the end of September.

Annual Inflation is Down

Annual inflation was down from 2.70% in August and 2.95% in July to 2.28% in September.

CPI was 252.439 in September, 252.146 in August, 252.006 in July and 251.989 in June.

Monthly Inflation for September was 0.12%, August was 0.06%, July was 0.01%, and June was 0.16% compared to 0.53% in September 2017.

Next release November 14th

Monthly Inflation:

Annual inflation for the 12 months ending in September was 2.28% down from 2.70% in August.

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in September on a seasonally adjusted basis after rising 0.2 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.3 percent before seasonal adjustment. The shelter index continued to rise and accounted for over half of the seasonally adjusted monthly increase in the all items index. The energy index declined 0.5 percent in September after rising in August. The food index was unchanged in September, as an increase in the index for food away from home offset a decline in the food at home index.”

The following table shows the changes from September for the major categories in seasonally adjusted terms and for the entire 12 months in unadjusted terms.

From the table we can see that on a monthly Seasonally adjusted basis Used Cars and Trucks actually fell -3.0% and even Gasoline fell -0.2% while several other categories had minor gains. On an annual unadjusted basis however we see that Used Cars and Trucks are down -1.5% for the entire year and Gasoline is up 9.1%. Overall, energy is up 4.8% over the year and shelter is up 3.3%.

Typically the monthly inflation rate is highest during the first quarter (January through March) with April and May often being among the high months but not always.

The lowest monthly inflation is typically during the last quarter (October through December) with June through September typically being moderate.

Although the monthly differences seem relatively small, if we had 12 months of 0.42% inflation we would have 5.04% annual inflation but 12 months at 0.12% like we had in September would only result in 1.44% annual inflation. But when higher months are combined with lower inflation months and even some negative months the annual inflation becomes much lower. We can expect that the last quarter of this year will bring the inflation rate down further. See our Moore Inflation Predictor to see our current projections.

Regional Inflation Information

The U.S. Bureau of Labor Statistics also produces regional data. So if you are interested in more localized inflation information you can find it here.

Food and Energy Breakdown

The BLS publishes an index entitled “All items Less Food and Energy” which often causes people some confusion. It doesn’t mean they stopped including food and energy in the Consumer Price Index. It just means that they have broken them out so you can compare their increase to other components. In this chart we can see the effects of food, energy and all other items on the total index. For more info see What is Core Inflation?

Food

The food index was unchanged in September. The index for food at home, which was unchanged in August, fell 0.1 percent in September with major grocery store food group indexes mixed. The index for meats, poultry, fish, and eggs fell 1.0 percent in September, with all its major component indexes falling. The fruits and vegetables index also fell, declining 0.5 percent. The index for dairy and related products declined 0.3 percent.

Energy

The energy index declined 0.5 percent in September after rising 1.9 percent in August. After rising 3.0 percent in August, the gasoline index declined slightly in September, falling 0.2 percent. (Before seasonal adjustment, gasoline prices increased 0.3 percent in September.) The electricity index fell 0.5 percent in September after rising in August, and the index for natural gas, which also increased in August, fell 1.7 percent in September.

Misery Index

The misery index as of October 2018 (based on the most recent official government inflation and unemployment data for the 12 months ending in September) is at 5.98% down from 6.60% in August which was down from 6.85% in July, and 6.87% in June.

At 5.98%, the misery index is the lowest its been since August 2016 when it was 5.96%. However, beginning in September 2016, it jumped to 6.46% before peaking at 7.44% in February 2017.

But it is still less than half of the peak of 12.87% in both October and November 2011 which was pretty miserable. The Misery index is still well below the February 2017 peak of 7.44%. The average inflation rate since the beginning of the Misery Index in January 1948 is 3.53% which is still higher than current inflation levels… so if inflation were “average” the misery index would be higher.

The stock market has taken a beating over the last month. Currently the NYSE ROC index is at roughly 0% for October indicating that the annual rate of return is nil. This is a difficult time to hold but…